Identify the risks
Think about people, customers, advice, products, premises, equipment and interruption.
Business insurance guide UK
Understand what could go wrong — then work out which insurance deserves a place between the risk and your bank account.
Polar Insurance Guide helps UK startups and small businesses work through the insurance that may apply to their people, customers, advice, products, property and everyday operations. Understand the main types of cover, identify what needs checking and know when insurance may be legally required.
Employers’ Liability checks
Public and professional risk
Plain-English cover guide
Inside Polar · Insurance Guide
Example
INSURANCE GUIDE
What might this business need?
Start with how the business operates and the people, customers and property exposed to risk.
BUSINESS RISK PICTURE
Northway Services Ltd
3 staff
People
On-site
Customer work
Advice
Included
Employers’ Liability
Required
Public Liability
Consider
Professional Indemnity
Consider
Tools & equipment
Review
Next insurance action:
confirm Employers’ Liability cover before the first employee starts work.
What business insurance do I need?
The answer depends on what the business could lose — and who could lose something because of the business.
A tradesperson visiting customer homes has different risks from a consultant giving advice online. A shop has different exposures from a software business. Polar starts with the way your business actually operates.
Match cover to risk
Understand what the main insurance products are designed to protect against.
Check the details
Compare limits, exclusions, excesses and policy conditions before buying cover.
Types of business insurance UK
Different insurance exists because different things can go wrong.
The main job is understanding which risks genuinely exist in your business rather than buying every product with the word “business” in its name.
Employers’ Liability
Helps cover compensation costs if an employee is injured or becomes ill because of their work.
Public Liability
Helps protect against claims from members of the public for injury or property damage connected with business activity.
Professional Indemnity
Helps protect against claims that professional advice, work or services caused a client financial loss.
Product Liability
Helps protect against claims where a product supplied, made or sold causes injury or damage.
Tools & Equipment
Can help protect important business equipment against insured loss, theft or damage.
Business Property
Can cover premises, contents, stock or other business property depending on the policy.
Business Interruption
May help when an insured event interrupts normal trading and causes financial loss.
Cyber Insurance
Can provide protection and support for certain cyber incidents, data breaches or technology-related losses.
Employers’ Liability insurance
If you employ people, this is the insurance question you do not leave until later.
Most UK employers are legally required to hold Employers’ Liability insurance as soon as they become an employer.
Legal requirement for most employers.
Employers’ Liability insurance protects against compensation claims where an employee becomes injured or ill because of their work.
Key UK requirement:
where the legal requirement applies, cover must be for at least £5 million and provided by an authorised insurer.
where the legal requirement applies, cover must be for at least £5 million and provided by an authorised insurer.
When?
As soon as you become an employer where the compulsory insurance rules apply.
How much cover?
At least £5 million.
Which insurer?
The policy must come from an authorised insurer.
Certificate?
The insurance certificate must be available where employees can access it.
Exceptions?
Some limited exemptions exist, so the exact circumstances should be checked against current rules.
Liability insurance for small business
Employee. Public. Client. Three different relationships, three different insurance questions.
Liability insurance makes more sense when you begin with who might bring the claim rather than the insurance-product name.
Who could the business accidentally harm?
These three starting points separate several of the most common liability risks.
An employee
Employers’ Liability
Consider injury or illness arising from the work an employee carries out.
A member of the public
Public Liability
Consider injury or property damage connected with your business activities.
A client
Professional Indemnity
Consider financial loss allegedly caused by professional advice or services.
Public liability insurance
If your business meets the public, works at customer premises or has visitors, think carefully about public liability.
Public liability insurance can protect against claims that somebody outside the business was injured, or their property damaged, because of business activity.
Work at customer premises
A mistake, accident or damage at somebody else’s property can create a claim.
Customers visit you
Shops, offices, salons, workshops and other premises can expose the business to public risk.
Contracts may require it
Clients, landlords, venues or other organisations may ask for specified public-liability cover.
Professional indemnity insurance
If people pay for your judgement, advice or specialist work, consider what happens when they say it cost them money.
Professional indemnity insurance can protect against certain claims that professional advice, work or services caused a client financial loss.
Advice
The business gives recommendations customers rely on.
Design
Mistakes in professional design work could create a client loss.
Consulting
Clients pay for expertise, analysis or specialist professional input.
Specialist services
Errors or omissions in professional work could create financial consequences.
Product liability insurance
Making the product is not the only way product risk can reach your business.
Product liability can be relevant to businesses that manufacture, sell, distribute or otherwise supply products where a defect could cause injury or damage.
Manufacture
Products the business creates can expose it to claims if something goes wrong.
Sell
Retailers and other sellers may still need to consider product-liability exposure.
Distribute
Businesses supplying products through a wider chain should understand where their risk sits.
Business property insurance
Ask what you would have to replace tomorrow if something important disappeared tonight.
Businesses often depend on tools, equipment, stock, computers, furniture or premises long before they think of those items as an insurance problem.
What does the business rely on physically?
Use the replacement question to identify the assets that deserve protection.
Tools & equipment
What equipment could stop the business delivering customer work if it were lost or damaged?
Stock
How much money is tied up in goods or materials waiting to be sold or used?
Premises & contents
What physical property would need replacing or repairing after an insured event?
Business interruption insurance
Damage costs money twice when it also stops the business trading.
Replacing damaged property and surviving the period when the business cannot operate are different financial problems. Business interruption cover can address certain lost income and additional costs following insured events, subject to the policy terms.
Lost trading income
Consider what happens to revenue while normal operations are disrupted.
Continuing costs
Some business expenses may continue even while customers cannot be served normally.
Recovery time
Think about how long the business might realistically need to return to normal operation.
Cyber insurance for small business
Your business does not need a server room to have a cyber risk.
Email, customer information, cloud systems, online payments and business accounts can all create exposure to cyber incidents. Cyber insurance can form part of the wider risk-management picture depending on the business.
Customer data
Consider what would happen if personal or commercially sensitive data were exposed.
Business systems
Consider how dependent the business is on email, cloud software and online access.
Cyber response
Some policies can include access to specialist response support following covered incidents.
Client insurance requirements
Sometimes the customer decides the level of cover before the law does.
Contracts, landlords, venues, professional bodies or larger customers can require particular insurance or specific limits of cover before they will work with a business.
Before signing the contract, check the insurance clause.
Make sure the business can actually satisfy any insurance requirements it is agreeing to.
Type of cover
Does the customer require public liability, professional indemnity or another policy?
Cover limit
Is there a minimum level of insurance stated in the contract?
Evidence
Will the customer expect to see a policy schedule or certificate before work begins?
Compare business insurance
Do not compare policies using the premium alone.
Two policies with the same title can have different limits, excesses, exclusions and conditions. The useful comparison is what protection the business actually gets.
The cheapest policy is expensive if it does not cover the claim you thought it did.
Read the cover details and ask questions when something is unclear.
For more complex risks, an insurance broker can help identify and arrange suitable cover.
Before buying, compare
Cover limit
The maximum amount the policy will pay under the relevant section.
Excess
The amount the business may have to contribute towards certain claims.
Exclusions
Situations or losses the policy specifically does not cover.
Conditions
Actions or standards the policyholder may need to comply with.
Territory and activity
Make sure where and how the business operates is actually covered.
Review business insurance
The right insurance on launch day can become the wrong insurance as the business grows.
Review cover when the business changes rather than assuming the original policy still matches the risk.
First employee
Employment creates a major insurance review point.
New premises
Moving or taking workspace can change property and liability exposure.
New service
Different work can introduce risks the original policy was not arranged to cover.
Higher turnover
Growth can change the scale of both the risk and the appropriate cover.
Connected business protection
Insurance should sit beside the risks it is there to protect.
Polar keeps the insurance check connected with business setup, licences, people, documents and the wider legal and risk picture.
Business Setup
→
Licence Finder
→
Insurance Guide
→
Legal Guide
→
People
→
Document Vault
Small business insurance guidance
Polar helps you understand the questions. Your insurer or broker provides the policy.
Insurance needs depend on the individual business and policy wording matters. Polar helps founders understand what risks deserve investigation, but it does not underwrite insurance or guarantee that a particular policy is suitable.
Identify
Work out which risks exist because of the way the business operates.
Investigate
Discuss appropriate cover with insurers, brokers or relevant professional advisers.
Review
Check the insurance again when people, turnover, premises or services change.
Business insurance FAQs
Questions about insurance for UK small businesses.
What business insurance do I need in the UK?
It depends on how your business operates. Common areas to consider include Employers’ Liability, public liability, professional indemnity, product liability, property, tools, cyber and business interruption cover.
Is business insurance legally required in the UK?
Some insurance is legally required in specific circumstances. Employers’ Liability insurance is compulsory for most businesses that employ people. Other types of insurance may be optional, contractually required or required by a regulator or professional body.
How much Employers’ Liability insurance do I need?
Where the compulsory insurance requirement applies, the business must normally have at least £5 million of Employers’ Liability cover from an authorised insurer.
Do sole traders need business insurance?
A sole trader without employees may not have the same compulsory Employers’ Liability requirement, but the business may still need or benefit from other insurance depending on its customers, work, products, equipment and risks.
What is public liability insurance?
Public liability insurance helps protect against certain claims that members of the public were injured or their property was damaged because of business activities.
Is public liability insurance compulsory?
It is not generally compulsory for every UK business, but it may be required by customers, contracts, venues or other organisations and can be important where the business interacts with the public.
What is professional indemnity insurance?
Professional indemnity insurance can protect against certain claims that professional advice, work or services caused a customer or client financial loss.
What is product liability insurance?
Product liability insurance can protect against certain claims involving injury or damage caused by products the business makes, sells or supplies.
How often should I review my business insurance?
Review cover at renewal and whenever the business changes significantly, such as employing people, moving premises, adding services, purchasing major equipment or substantially increasing turnover.
Does Polar sell business insurance?
No. Polar Insurance Guide helps founders understand and organise the questions they should investigate. Insurance itself is purchased from an insurer or arranged through an insurance broker.
Polar Insurance Guide
Know what you are protecting before somebody asks whether you’re insured.
Understand the main types of business insurance, identify the risks that apply to your business and know which cover needs investigating before customers, employees or problems arrive.